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Slow Tower Leasing Forecast Will Take Off in 2016 — RBC

June 4, 2015

By J. Sharpe Smith —

June 4, 2015 — The tower industry appears to be taking a breather from its torrid pace of last year. But RBC Capital Markets expects it to pick up again next year.

“Despite a slower 2015 leasing environment in the United States and few apparent near-term operating catalysts, we believe the 2016 set-up for tower stocks is favorable,” Jonathan Atkin, senior analyst, wrote in a Tower Update.

The firm reduced its leasing forecast from 18,000 to 16,000 broadband equivalents (BBEs) for 2015, based on lower expectations for AT&T and for near term deployment on WCS spectrum.

Sprint activity remains slow in most regions, with a few exceptions. Ongoing projects include LTE deployments at 2.5 GHz and 800 MHz, CDMA at 800 MHz and LTE second-carrier deployments at 1,900 MHz.

Verizon, T-Mobile Primary Leasing Drivers in 2015

Verizon should be more active on small cell deployments 2015 and outdoor DAS deployments will be flat. A decline in LTE deployments in the AWS band this year, should be offset by 1900-MHz LTE deployment.

RBC is optimistic about 2016, primarily because of expectations that AT&Y will resume infill activity and begin overlays in the WCS or AWS-3 bands. Additionally, Sprint is expected to densify its networking using macrocells, helping all tower companies, and to deploy small cells, helping Crown Castle.

“Site additions [at Sprint] should ramp in the second half of 2015 as the company embarks on infill coverage, with activity likely to accelerate during 2016-2017, in our view,” Atkin wrote.